Hand-to-Mouth (H2M) is currently​ cash-constrained, and must make a decision about whether to delay paying one of its​ suppliers, or take out a loan. They owe the supplier $ 11,500 with terms of 1.8​/10 Net​ 40, so the supplier will give them a 1.8 % discount if they pay by today​ (when the discount period​ expires). ​ Alternatively, they can pay the full $ 11,500 in one month when the invoice is due. H2M is considering three​ options:

Alternative​ A: Forgo the discount on its trade credit​ agreement, wait and pay the full $ 11,500 in one month.

Alternative​ B: Borrow the money needed to pay its supplier today from Bank​ A, which has offered a​ one-month loan at an APR of 11.6 %. The bank will require a​ (no-interest) compensating balance of 5.3 % of the face value of the loan and will charge a $ 95 loan origination fee. Because H2M has no​ cash, it will need to borrow the funds to cover these additional amounts as well.

Alternative​ C: Borrow the money needed to pay its supplier today from Bank​ B, which has offered a​ one-month loan at an APR of 14.8 %. The loan has a 0.5 % loan origination​ fee, which again H2M will need to borrow to cover.

1. Note: This problem is for the 2018 tax year.

Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1112. Devon does not want $3 to go to the Presidential Election Campaign Fund.

Devon's wife, Ariane, passed away in 2014. Devon's son, Tom, who is age 18, resides with Devon. Tom's Social Security number is 123-45-6788.

Devon owns a sole proprietorship for which he uses the accrual method of accounting and maintains no inventory. His revenues and expenses for 2018 are as follows:

*New office equipment ($21,000); Devon uses the immediate expense election.

** $18,000 for employees and $8,000 for Devon.

Other income received by Devon includes the following:

During the year, Devon and his sole proprietorship had the following property transactions:

1. Sold Blue, Inc. stock for $45,000 on March 12, 2018. He had purchased the stock on September 5, 2015, for $50,000.
2. Received an inheritance of $300,000 from his uncle, Henry. Devon used $200,000 to purchase Green, Inc. stock on May 15, 2018, and invested $100,000 in Gold, Inc. stock on May 30, 2018.
3. Received Orange, Inc. stock worth $9,500 as a gift from his aunt, Jane, on June 17, 2018. Her adjusted basis for the stock was $5,000. No gift taxes were paid on the transfer. Jane had purchased the stock on April 1, 2012. Devon sold the stock on July 1, 2018, for $22,000.
4. On July 15, 2018, Devon sold one-half of the Green, Inc. stock for $40,000.
5. Devon was notified on August 1, 2018, that Yellow, Inc. stock he purchased from a colleague on September 1, 2017, for $52,500 had become worthless. While he perceived that the investment was risky, he did not anticipate that the corporation would declare bankruptcy.
6. On August 15, 2018, Devon received a parcel of land in Phoenix worth $220,000 in exchange for a parcel of land he owned in Tucson. Because the Tucson parcel was worth $245,000, he also received $25,000 cash. Devon's adjusted basis for the Tucson parcel was $210,000. He originally purchased it on September 18, 2015.
7. On December 1, 2018, Devon sold the condominium in which he had been living for the past 20 years (1844 Lighthouse Lane, Albuquerque, NM 87131) and moved into a rented townhouse. The sales price was $480,000, selling expenses were $28,500, and repair expenses related to the sale were $9,400. Devon purchased the condominium for $180,000.

Devon's potential itemized deductions, exclusive of the aforementioned information, are as follows:

During the year, Devon makes estimated Federal income tax payments of $35,000.

Required:

Compute Devon's lowest net tax payable or refund due for 2018 by providing the information requested for Forms 1040, 4562, 8824, and 8949 as well as Schedules A, B, D, SE. Assume that he makes any available elections that will reduce the tax.

• Make realistic assumptions about any missing data.
• If an amount is zero, enter "0".
• Enter all amounts as positive numbers.
• It may be necessary to provide information regarding the other schedules and forms before completing the requested information for Form 1040.
• Devon's qualified dividends and capital gains rate is 15%.

When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar.

On January 1, 2021, M.T. Toombe Mausoleum granted restricted stock units (RSUs) representing 60 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $15 per share on the grant date. At the date of grant, Toombe anticipated that 5% of the recipients would leave the firm prior to vesting. In 2022, 3% of the options are forfeited due to executive turnover. Toombe chooses the option not to estimate forfeitures.


Required:
1. Prepare the appropriate journal entry to record compensation expense on December 31, 2021. Ignore taxes.

• Record the compensation expense on December 1, 2021 for award of restricted stock units (RSUs) representing 60 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares had a market price of $15 per share on the grant date.Toombe anticipated that 5% of the recipients would leave the firm prior to vesting.

2. Prepare the appropriate journal entry to record compensation expense on December 31, 2022. Ignore taxes.

• Record the compensation expense on December 1, 2022 for award of restricted stock units (RSUs) representing 60 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares had a market price of $15 per share on the grant date.Toombe anticipated that 5% of the recipients would leave the firm prior to vesting.

Citation Builders, Inc., builds office buildings and single-family homes. The office buildings are constructed under contract with reputable buyers. The homes are constructed in developments ranging from 10–20 homes and are typically sold during construction or soon after. To secure the home upon completion, buyers must pay a deposit of 10% of the price of the home with the remaining balance due upon completion of the house and transfer of title. Failure to pay the full amount results in forfeiture of the down payment. Occasionally, homes remain unsold for as long as three months after construction. In these situations, sales price reductions are used to promote the sale. During 2018, Citation began construction of an office building for Altamont Corporation. The total contract price is $15 million. Costs incurred, estimated costs to complete at year-end, billings, and cash collections for the life of the contract are as follows: 2018 2019 2020 Costs incurred during the year $ 3,000,000 $ 7,125,000 $ 3,375,000 Estimated costs to complete as of year-end 9,000,000 3,375,000 — Billings during the year 1,500,000 7,500,000 6,000,000 Cash collections during the year 1,350,000 6,050,000 7,600,000 Also during 2018, Citation began a development consisting of 12 identical homes. Citation estimated that each home will sell for $720,000, but individual sales prices are negotiated with buyers. Deposits were received for eight of the homes, three of which were completed during 2018 and paid for in full for $720,000 each by the buyers. The completed homes cost $540,000 each to construct. The construction costs incurred during 2018 for the nine uncompleted homes totaled $3,240,000.

Required:

1. Which method is most equivalent to recognizing revenue at the point of delivery?

2. Answer the following questions assuming that Citation uses the completed contract method for its office building contracts: 2-a. How much revenue related to this contract will Citation report in its 2018 and 2019 income statements? 2-b. What is the amount of gross profit or loss to be recognized for the Altamont contract during 2018 and 2019? 2-c. What will Citation report in its December 31, 2018, balance sheet related to this contract? (Ignore cash.)

3. Answer the following questions assuming that Citation uses the percentage-of-completion method for its office building contracts. 3-a. How much revenue related to this contract will Citation report in its 2018 and 2019 income statements? 3-b. What is the amount of gross profit or loss to be recognized for the Altamont contract during 2018 and 2019? 3-c. What will Citation report in its December 31, 2018, balance sheet related to this contract? (Ignore cash.)

Paper I: Letter to the CEO

RE: - Accounting Principles: Why ethics is a fundamental business concept

Accounting is an information system that identifies, records, and communicates the economic events of an organization to interested users. Because of the confidential nature to which the creating and maintaining of these reports are handled, honesty and integrity are highly regarded traits to the hospitality professional accountant. Professional ethics, or the standards of conduct to which actions are judged to be right or wrong, depends on the honesty of the individuals you deal with as a manager of a business.

For this paper, assume you are the Director of Operations for a hypothetical chain of 24 mid-service roadside motels. The CEO of the chain has sent you a memo stating that he would like to replace the current accounting firm that handles all the operational accounting for the firm. The reason he has decided that their services are no longer needed was not made evident to you in the memo. However, you suspect it may have something to do with the fact that their accounting practices were brought up as “questionable” at last month’s operations meeting, where last cycles income statements were openly discussed and examined by upper management.


The CEO further outlines in his memo that he wishes for you to begin researching new accounting firms. Write a letter addressed to the CEO, Days Inn of America outlining how you propose to value ethical conduct when interviewing prospective companies. In your letter, you should include / address the following areas:

1. Your “personal” philosophy on ethics as a fundamental business concept
2. How you plan on identifying and analyzing the principle elements of business ethics within the prospective accounting firms (be specific)
3. How you plan to ensure the non-ethical conduct of the previous firm will not happen again (internal control measures) specifically under three headings:

a. Cost analysis
b. Analysis of new contracts
c. Participation in efforts to control expenses efficiently
4. An analysis of what challenges you anticipate facing during this project

The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017.

1. On July 31, the company’s Cash account has a $24,752 debit balance, but its July bank statement shows a $27,080 cash balance.
2. Check No. 3031 for $1,520 and Check No. 3040 for $752 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $536 and Check No. 3069 for $2,288, both written in July, are not among the canceled checks on the July 31 statement.
3. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for $1,280 but was erroneously entered in the accounting records as $1,270.
4. The July bank statement shows the bank collected $7,500 cash on a noninterest-bearing note for Branch, deducted a $38 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement.
5. The bank statement shows an $805 charge for a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
6. The July statement shows a $11 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
7. Branch’s July 31 daily cash receipts of $8,652 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.

Required:

1. Prepare the bank reconciliation for this company as of July 31, 2017.

2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

1.

Tuco Salamanca Corp. sold a machine for $4,000 on December 31, 2019. The machine was purchased on January 1, 2016, for $8,500. The residual value was estimated at $500, and the firm uses the straight-line depreciation method with an estimated useful life of 8 years. Which of the statements is correct?

2.

Which of the following costs will not be part of the value of PP&E that is constructed by a company for internal use?

3.

The depreciation expense will never appear in:

4.

Skinny Pete Inc. uses the units method of depreciation for one of its machines. The company bought the machine on March 12, 2017, for $1,400. The company estimates that the machine will be used to produce 300 gadgets in 2017, 500 gadgets in 2018, and 400 gadgets in 2019. The company further estimates that the machine has a residual value of $200. The machine was sold on December 31, 2018, for $600. Which of the statements is correct?

How does accounting for a nongovernmental not-for-profit organization differ from accounting for a for-profit corporation? Choose a not-for-profit, review its financial statements, and explain the items that you find that are different from what you would see in the financial statements of a for-profit corporation.

Bad debts -Direct Write-off and Allowance Methods -

EchoGnomics is a wholesaler of garden figurines, selling mainly to independent gardening shops in Australia. All sales are conducted on a 30-day credit basis and no early payment or cash discounts are given. The following information has been extracted from the accounting records as at 30 June 2020.

Sales $874 000 , Sales Returns & Allowances 45 600 , Cash Collected ($549 600 + GST 10%) 604 560 , Bad Debts to be written off 6 952 , Accounts Receivable written off ($6 952 + GST10%) 7 647 GST Payable/ Collections (874 000 -$45 600) x 10% = 82 840

Required:

A. Assuming that EchoGnomics uses the direct write-off method of accounting for bad debts:

1. Show the general journal entry required to write-off method of accounting for bad debts.

2. What amount would be shown for bad debts expense in the income statement at 30June 2020?

3. What amount would beshown for accounts receivable in the balance sheet at 30 June2020?

B. Assuming that EchoGnomics uses the allowance method for accounting for bad debts and the following information was found after examination of the accounts:

i] Allowance for doubtful debts (1 July 2019)$7 920 Cr . ii] Allowance calculated based on 1% of net credit sales for the year

1. Show the general journal entries required to write off the bad debts and recognise the required allowance for doubtful debts.

2. What amount would be shown for bad debts expense in the income statement at 30 June 2020?

3. What amount would be shown for accounts receivable in the balance sheet at 30 June 2020?

Will you show me a vertical analysis of the assets portion of this balance sheet?

he plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2020:

Transactions during 2021 were as follows:

1. On January 2, 2021, equipment were purchased at a total invoice cost of $265,000, which included a $5,600 charge for freight. Installation costs of $28,000 were incurred.
2. On March 31, 2021, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $26,000. The fair value of the building on the day of the donation was $17,400.
3. On May 1, 2021, expenditures of $51,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather. The repair doesn't provide future benefits beyond those originally anticipated.
4. On November 1, 2021, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell’s common stock that had a market price of $39 per share. Pell paid legal fees and title insurance totaling $23,500. Shortly after acquisition, the building was razed at a cost of $36,000 in anticipation of new building construction in 2022.
5. On December 31, 2021, Pell purchased a small storage building by giving $15,500 cash and an old automobile purchased for $18,500 in 2014. Depreciation on the old automobile recorded through December 31, 2021, totaled $13,875. The fair value of the old automobile was $3,800.

Required:

For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2021, using the following depreciation methods and useful lives:

Land improvements—Straight line; 15 years.
Building—150% declining balance; 20 years.
Equipment—Straight line; 10 years.
Automobiles—Units-of-production; $0.50 per mile

Depreciation is computed to the nearest month and no residual values are used. Automobiles were driven 38,500 miles in 2021. (Do not round intermediate calculations and round your final answers to 2 decimal places.)

1. Connor Company is considering the purchase of new equipment for $144,000. The expected life of the equipment is 8 years with no residual value. The equipment is expected to earn revenues of $114,000 per year. Total expenses, including depreciation, are expected to be $90,000 per year. Connor management has set a minimum acceptable rate of return of 20%. Assume straight-line depreciation.

   a. Determine the equal annual net cash flows from operating the equipment. Round to the nearest dollar.
   $

   Present Value of an Annuity of $1 at Compound Interest
   Year	6%	10%	12%	15%	20%
   1	0.943	0.909	0.893	0.870	0.833
   2	1.833	1.736	1.690	1.626	1.528
   3	2.673	2.487	2.402	2.283	2.106
   4	3.465	3.170	3.037	2.855	2.589
   5	4.212	3.791	3.605	3.352	2.991
   6	4.917	4.355	4.111	3.784	3.326
   7	5.582	4.868	4.564	4.160	3.605
   8	6.210	5.335	4.968	4.487	3.837
   9	6.802	5.759	5.328	4.772	4.031
   10	7.360	6.145	5.650	5.019	4.192

   b. Calculate the net present value of the new equipment using the present value of an annuity of $1 table above. Round to the nearest dollar. If required, use the minus sign to indicate a negative net present value.

   Annual net cash flow	$
   Present value of equipment cash flows	$
   Less equipment costs	$
   Net present value of equipment	$

   c. Does your analysis support the purchase of the new equipment?
   

write an essay about Special Order Decisions in your own words.

he following costs result from the production and sale of 4,900 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $340 each. The company has a 35% income tax rate.

Required:

1. Prepare a contribution margin income statement for the company.
2. Compute its contribution margin per unit and its contribution margin ratio.

Why would a company choose a value-based pricing system in lieu of a cost-plus pricing system and what are the pros and cons to each pricing system.